Family constitution

A family constitution is the document in which a family writes down how it will own, run and decide about what it holds together: the business, the shared assets and the functions around them. It is also called a family charter or family protocol, and in Portugal and Spain it is searched as protocolo familiar. This entry is for families with an operating company or a holding company who are drafting one or already have one. The short conclusion: the constitution sets the rules, but most of them bind only where a lawyer has reproduced them in the shareholders’ agreement or the company’s articles.

What a family constitution covers

Most constitutions answer the same questions, in plain language rather than legal drafting:

• Values and purpose: why the family keeps assets together at all.
• Decision rights: who decides what, by which majority, and which matters go to a family council.
• Entry into the business: the conditions for family members to work in the company or sit on its board.
• Ownership: who may hold shares, and what happens on marriage, divorce or death.
• Information: what every adult family member is entitled to see, and how often.
• Disputes: the route a disagreement follows before anyone calls a lawyer.
• Review: when the document is reopened, usually at each change of generation.

The purpose of a family constitution

The purpose of a family constitution is to agree the rules before they are needed. It records who decides, who may join the business, who may own shares and how disputes are settled, so that a death, a divorce or a sale does not force the family to negotiate those rules under pressure.

Is a family constitution legally binding?

Generally, no. A family constitution is a moral and governance document: it records what the family has agreed, not what a court will enforce. Its clauses bind only where they are reproduced in the shareholders’ agreement, the company’s articles or another contract. Which clauses need that, and how, is the lawyer’s decision; PWA gives no legal advice.

How the family constitution connects to the shareholders’ agreement

The constitution speaks to the family; the shareholders’ agreement and the articles speak to the company and to the courts. Company law draws that line explicitly. In Portugal, a shareholders’ agreement (acordo parassocial) has effect only between the shareholders who sign it, and acts of the company cannot be challenged on its basis (Código das Sociedades Comerciais, Art. 17(1)); it may cover how they vote, but not how directors run the company (Art. 17(2)). In Spain, pacts kept private between shareholders cannot be enforced against the company (Ley de Sociedades de Capital, Art. 29). A rule that must hold against the company or an outside buyer therefore belongs in the articles of the operating company or of the holding company; a rule between family shareholders belongs, at the least, in the shareholders’ agreement.

Spain adds a publicity route. Under Royal Decree 171/2007, the board of a non-listed company may, voluntarily, record in the Mercantile Registry that the protocol exists, deposit it with the annual accounts, or cite it in the deed when it adopts registrable resolutions in its execution (Arts. 3, 5, 6 and 7). Publicity makes the document visible; what binds the company is still the articles and the resolutions adopted to carry it out.

A family constitution example, clause by clause: where each topic usually lives and what a lawyer has to reproduce for it to bind. The exact form depends on the jurisdiction and the company type.

The documents drift apart unless someone owns the whole set. The lawyer drafts and amends the shareholders’ agreement and the articles; the family council owns the constitution; and someone has to keep the map between them: a clause register listing each rule, the document that makes it binding, the entity it applies to and the date it was last checked. That register is coordination work, not legal work.

The family council is where the constitution is used rather than filed. It meets on a fixed calendar, checks family decisions against the constitution, records them in a written decision log and reopens the document at set triggers: a marriage or divorce, a child coming of age, a death, a sale or a new entity in the structure. When a change touches ownership, the council sends it to the lawyer so that the shareholders’ agreement and the articles move with it.

What the template does not tell you

Search results offer templates, and a template produces a document. It rarely produces agreement, and agreement is the point. A constitution is also not a will, and it does not replace the legal work above in each jurisdiction concerned.

For families in the €2–20M range the failure is usually quieter. The constitution is signed once and never connected to anything: nobody maps it to the entities it governs, the council it creates never meets, and the information it promises never arrives. It becomes one more input to succession planning that nobody reads.

PWA designs and runs the operating layer around private wealth, so we treat the constitution as an operating document: each rule tied to an entity, a person and a date. That is governance design, the core of our family governance and education work. PWA does not manage money, hold mandates, take commissions or give regulated investment, tax or legal advice. Our insight on family governance and next-generation succession shows where these documents break in practice. If you already have one and are not sure it still holds, a written second opinion will tell you in writing.

Sources

• Código das Sociedades Comerciais (Decreto-Lei n.º 262/86), Article 17, acordos parassociais: paragraph 1 on effects only between the parties, paragraph 2 on voting but not management conduct. Checked 2026-10-06.
• Ley de Sociedades de Capital (Real Decreto Legislativo 1/2010), Article 29: private pacts between shareholders are not enforceable against the company. Checked 2026-10-06.
• Real Decreto 171/2007, de 9 de febrero, por el que se regula la publicidad de los protocolos familiares: Article 2 (definition), 3 (publicity is voluntary, decided by the board), 5, 6 and 7 (the three registry routes). Checked 2026-10-06.

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This entry is part of PWA’s plain-language glossary of terms used in modern family office architecture.